Salix Wins Napo Pharmaceuticals Litigation

Jury Decides Case in Favor of Salix Pharmaceuticals

Jury Finds Salix Did Not Breach License Agreement

February 25, 2014 01:29 PM Eastern Standard Time

RALEIGH, N.C.--(BUSINESS WIRE)--Salix Pharmaceuticals, Ltd. (NASDAQ:SLXP) today announced that a New
York State Supreme Court jury has entered a verdict in its favor in a
lawsuit filed against Salix by Napo Pharmaceuticals relating to Fulyzaq™
(crofelemer).

The jury specifically found that Salix complied with its contractual
obligations in commercializing Fulyzaq (crofelemer) in the United
States, and thus did not breach the license agreement between the
parties.

“We are pleased with the verdict and appreciate the thoughtfulness with
which the jury approached this case. Salix takes its contractual
obligations to its partners very seriously,” stated Carolyn Logan, Salix
President and Chief Executive Officer. “We continue to believe in the
future of Fulyzaq (crofelemer) and look forward to continuing our
commercialization efforts.”

Background

As has been previously reported in the company's filings with the
Securities and Exchange Commission, on May 5, 2011, Napo filed a lawsuit
against the Company in the Supreme Court of the State of New York,
County of New York, alleging that the Company had engaged in fraudulent
conduct, breached its collaboration agreement with Napo dated
December 9, 2008, and breached its duty of good faith and fair dealing.
Napo also sought a declaratory judgment that Napo had the right to
terminate the collaboration agreement and sought unspecified damages in
excess of $150 million. On or about December 28, 2011, Napo filed an
amended complaint seeking an unspecified amount of damages for alleged
breaches of the collaboration agreement by the Company and replacing
Napo’s original complaint. The Company filed an answer to the amended
complaint and counterclaims on or about January 17, 2012. Discovery
concluded last year, and, on May 31, 2013, the Company filed a motion
for partial summary judgment. The court heard oral arguments on the
motion in August 2013. On December 24, 2013, the court entered a
short-form order granting the Company’s motion for partial summary
judgment, narrowing the issues in the case. Napo filed an appeal of that
decision on January 27, 2014 to the Appellate Division of the Supreme
Court of the State of New York. On January 29, 2014 the Court vacated
and replaced portions of the short-form order with an order continuing
to grant the Company’s motion for partial summary judgment, narrowing
the issues in the case. Trial on the claims remaining in the case
commenced on February 10, 2014 and the jury decided on February 25, 2014
that Salix did not breach the license agreement.

Salix was represented in this matter by Covington & Burling LLP.

About Salix

Salix Pharmaceuticals, Ltd., headquartered in Raleigh, North Carolina,
develops and markets prescription pharmaceutical products and medical
devices for the prevention and treatment of gastrointestinal diseases.
Salix’s strategy is to in-license late-stage or marketed proprietary
therapeutic products, complete any required development and regulatory
submission of these products, and commercialize them through the
Company’s 500-member specialty sales force.

Salix trades on the NASDAQ Global Select Market under the ticker symbol
“SLXP”.

For more information, please visit our Website at www.salix.com
or contact Salix at 919-862-1000. Follow us on Twitter (@SalixPharma)
and Facebook (www.facebook.com/SalixPharma).
Information on our Twitter feed, Facebook page and web site is not
incorporated in our filings with the SEC.

Cautionary Statement Regarding Forward-Looking Statements

Please Note: The materials provided herein that are not historical facts
are or might constitute projections and other forward-looking statements
regarding future events. Although we believe the expectations reflected
in such forward-looking statements are based on reasonable assumptions,
our expectations might not be attained. Forward-looking statements are
just predictions and are subject to known and unknown risks and
uncertainties that could cause actual events or results to differ
materially from expected results. Factors that could cause actual events
or results to differ materially from those described in this press
release include, among others: litigation between the company and its
licensors; generic and other competition in an increasingly global
industry; litigation and the possible impairment of, or inability to
obtain, intellectual property rights and the costs of obtaining such
rights from third parties in an increasingly global industry; the cost,
timing and results of clinical trials and other development activities
involving pharmaceutical products; post-marketing approval regulation,
including the ongoing Department of Justice investigation of Salix’s
marketing practices; market acceptance for approved products; revenue
recognition and other critical accounting policies; the need to acquire
new products; general economic and business conditions; and other
factors.